Claudia Lown v.  Continental Casualty Company

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 CLAUDIA LOWN,
Plaintiff-Appellant,
v. No. 00-1547 
CONTINENTAL CASUALTY COMPANY,
Defendant-Appellee. 
Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Joseph F. Anderson, Jr., Chief District Judge.
(CA-99-82-3-17)
Argued: December 7, 2000
Decided: February 2, 2001
Before WILKINSON, Chief Judge, TRAXLER, Circuit Judge,
and James C. CACHERIS, Senior United States District Judge
for the Eastern District of Virginia, sitting by designation.
Affirmed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Traxler and Senior Judge Cacheris joined.
COUNSEL
ARGUED: Robert Edward Hoskins, FOSTER & FOSTER, L.L.P.,
Greenville, South Carolina, for Appellant. Ingrid Blackwelder Erwin,
OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,
Greenville, South Carolina, for Appellee.

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OPINION
WILKINSON, Chief Judge:
Claudia Lown argues that the federal courts lack subject matter
jurisdiction over this case because her long term disability plan was
a church plan not governed by the Employee Retirement Income
Security Act, 29 U.S.C. § 1001 et seq. (1994) ("ERISA"). Lown fur-
ther argues that if jurisdiction is proper, the district court erred in
finding that she was not totally disabled under the plan. Because
ERISA applies to Lown’s plan, and because Lown did not prove that
she was totally disabled, we affirm the judgment of the district court.
I.
Claudia Lown worked as a mental health counselor at Baptist
Healthcare System of South Carolina, Inc. This hospital is located in
Columbia, South Carolina. Until 1993, Baptist Healthcare was affili-
ated with the South Carolina Baptist Convention, a group of state
Baptist churches. That year, Baptist Healthcare’s Board voted to
remove itself as an agency of the South Carolina Baptist Convention.
The Convention subsequently ratified the Board’s decision. Accord-
ing to a Baptist Healthcare official, after 1993 no Baptist Healthcare
board member was a member of or held any office with the South
Carolina Baptist Convention. The official also stated that after 1993,
Baptist Healthcare did not receive any funding from either the South-
ern Baptist Convention or the South Carolina Baptist Convention.
Baptist Healthcare System served individuals of all faiths and
creeds. Fifteen chaplains as well as five or six ministerial counselors
served the hospital. No denominational requirement existed for either
the chaplains or the counselors. Its approximately 3,000 employees
were affiliated with a number of different faiths.
Baptist Healthcare maintained a long term disability plan for its
employees. Continental Casualty Co. issued and insured this disability
plan for employees of Baptist Healthcare. Continental made determi-
nations of eligibility under the plan. Baptist Healthcare and Continen-
tal used their best efforts to comply with all substantive requirements
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of ERISA. The plan endeavored to file all required forms to maintain
its status as an ERISA plan. Participants in the disability plan were
specifically advised that the plan was subject to ERISA. The benefits
booklet outlined the ERISA rights of participants under a section enti-
tled "Your Rights Under ERISA."
Certain Baptist Healthcare employees were also eligible for a
retirement plan. This retirement plan was established and maintained
by the Annuity Board of the Southern Baptist Convention. The retire-
ment plan was constructed as a church plan in order to qualify for
exemption from ERISA. Lown apparently was eligible for participa-
tion in both the retirement plan and the disability plan.
Lown’s job required her to sit for most of the day, although she had
to stand and walk for a combined two hours per day. Her last day at
work was September 16, 1997. In the preceding eight weeks, Lown
had missed work on average about every other day. Lown’s disability
plan only covered disabilities that were ongoing as of December 16,
1997. Lown filed a timely claim for total disability alleging that she
suffered from chronic fatigue and pain. Lown submitted relevant
medical evidence from two doctors — Drs. Russell Ditzler and Frank
Vasey. Keith Didyoung, a physician’s assistant with Dr. Ditzler’s
practice, also documented Lown’s illness. Didyoung’s Attending Phy-
sician Statement of December 1, 1997 stated that Lown was only par-
tially disabled. Furthermore, he wrote that he thought Lown was
capable of light work, her job could be modified to allow her to work,
and trial employment could begin on a part-time basis that month.
Continental denied Lown’s claim for disability benefits on March
5, 1998. Continental noted that the plan only provided benefits in case
of total disability, and that Lown was not totally disabled under the
plan. Specifically, Continental determined that Lown’s documentation
was inadequate to prove a total disability because of the lack of test
results or other objective evidence to support the disability. Continen-
tal called Dr. Vasey to request more concrete information, like diag-
nostic tests, which would show that Lown was totally disabled. Dr.
Vasey responded that there was "no ‘proof’ beyond my opinion based
on 1000 patients or so." The company also pointed to Lown’s
increased energy and ability to take care of a sick family member as
reasons for denying Lown’s claim.
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Lown appealed this decision on April 14, 1998. She provided a
new statement from Dr. Vasey in which he stated that Lown had been
totally disabled since September of 1997. In her letter, Lown claimed
that she stopped work in September of 1997 on Dr. Vasey’s recom-
mendation. Continental reviewed this new evidence, and told Lown
that it was not adequate to support an award of benefits. Subse-
quently, Continental’s Appeals Committee denied Lown’s claim. On
August 27, Lown further supplemented the record by submitting affi-
davits from herself and from Drs. Ditzler and Vasey. Dr. Ditzler
stated that Lown was totally disabled as of August, 1997. Dr. Vasey
stated that Lown was totally disabled as of February, 1998.
Lown filed suit in state court, and Continental removed the case to
federal court on federal question grounds. The district court, under de
novo review, upheld the denial of Lown’s benefits. It stated that
Lown failed to present reasonably supported and consistent evidence
of total disability. It thus ruled that Continental did not owe Lown
benefits under the plan. Lown now appeals.
II.
A.
Lown contends that the disability plan was a church plan, not an
ERISA plan. If the disability plan was a church plan, no federal ques-
tion would exist because the plan would not be covered by ERISA.
Because federal question jurisdiction is the only alleged basis for suit
in federal court, we must remand the case to state court if the disabil-
ity plan was a church plan.
ERISA is a "‘comprehensive statute designed to promote the inter-
ests of employees and their beneficiaries in employee benefit plans.’"
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137 (1990) (quoting
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983)). ERISA applies
to employee benefit plans established or maintained by any employer
engaged in commerce. 29 U.S.C. § 1003(a). Federal courts have juris-
diction to hear an action brought to recover benefits due under an
ERISA plan. 29 U.S.C. § 1132(a), 1132(e).
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Church plans are not ERISA plans, however. 29 U.S.C.
§ 1003(b)(2). A church plan means a plan established and maintained
"for its employees (or their beneficiaries) by a church or by a conven-
tion or association of churches." Id. § 1002(33)(A). A church plan
does not include all plans maintained by a church. The statute specifi-
cally excludes plans established and maintained primarily for the ben-
efit of those "who are employed in connection with one or more
unrelated trades or businesses." Id. § 1002(33)(B)(i).
Despite this exception to the definition of a church plan, a plan
established by a corporation associated with a church can still qualify
as a church plan. The statute defines church plans to include plans
"maintained by an organization, whether a civil law corporation or
otherwise, . . . if such organization is controlled by or associated with
a church or a convention or association of churches." Id.
§ 1002(33)(C)(i). An organization is controlled by a church when, for
example, a religious institution appoints a majority of the organiza-
tion’s officers or directors. 26 C.F.R. § 1.414(e)-1(d)(2) (2000). To be
"associated with a church," the corporation must share "common reli-
gious bonds and convictions with that church or convention or associ-
ation of churches." 29 U.S.C. § 1002(33)(C)(iv).
B.
Our jurisdiction in this case thus turns on whether, at the expiration
of Lown’s coverage under the plan in 1997, the disability plan was
an ERISA plan or a church plan. By 1997, the South Carolina Baptist
Convention did not control Baptist Healthcare. The Convention did
not appoint or approve a majority of Baptist Healthcare’s Board or
officers, and Lown points to no other factors indicating that the Con-
vention controlled the hospital. See 26 C.F.R. § 1.414(e)-1(d)(2).
Lown can still demonstrate, however, that Baptist Healthcare was
associated with the South Carolina Baptist Convention by showing
that the two shared sufficient "common religious bonds and convic-
tions." In deciding whether an organization shares such common
bonds and convictions with a church, three factors bear primary con-
sideration: 1) whether the religious institution plays any official role
in the governance of the organization; 2) whether the organization
receives assistance from the religious institution; and 3) whether a
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denominational requirement exists for any employee or
patient/customer of the organization.
Baptist Healthcare does not meet any of these criteria. First, the
South Carolina Baptist Convention played no role in the governance
of Baptist Healthcare. Baptist Healthcare and the South Carolina Bap-
tist Convention ended their affiliation in 1993. According to the
record, that year Baptist Healthcare’s Board voted to remove itself as
an agency of the South Carolina Baptist Convention. The state con-
vention ratified this action in November of 1993. The South Carolina
Baptist Convention did not appoint or approve any of Baptist Health-
care’s board members. Indeed, Lown points to no factor indicating
that Baptist Healthcare consulted with the South Carolina Baptist
Convention on any matter.
Second, Lown has not shown that Baptist Healthcare received any
support from the South Carolina Baptist Convention after its disaffili-
ation in 1993. The only testimony on this subject came from Willis
Gregory, who was Vice President of Human Resources for Baptist
Healthcare at the time. He stated that the hospital "received no
monies" from the South Carolina Baptist Convention, the Southern
Baptist Convention, or any other Baptist entity.
Third, no denominational requirement existed for anybody affili-
ated with Baptist Healthcare. Of course, the hospital served individu-
als of all faiths, and its doctors, nurses, and other employees
represented many different creeds. Perhaps most importantly for this
prong of the inquiry, Baptist Healthcare did not even impose a
denominational requirement on the ministers and chaplains affiliated
with the hospital.
Lown points to only one fact potentially tying Baptist Healthcare
to the South Carolina Baptist Convention — Baptist Healthcare’s par-
ticipation in a pension plan that the hospital treated as a church plan.
This fact, however does not establish a common bond between the
two entities. Indeed, Gregory testified that Baptist Healthcare’s partic-
ipation in the pension plan was a "purely business relationship." It is
true that the South Carolina Baptist Convention and Baptist Health-
care both shared the name "Baptist." Yet the name is not the thing.
Rather, the evidence shows that Lown has failed to satisfy any of the
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criteria for determining common religious bonds and convictions
between two entities. Therefore, subject matter jurisdiction is proper
under 29 U.S.C. § 1132(e) because the long term disability plan was
an ERISA plan, not a church plan.
III.
Lown asserts that Continental improperly denied her benefits under
the disability plan. Both parties acknowledge that the standard of
review is de novo because the plan did not vest discretion with Conti-
nental. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989); Haley v. Paul Revere Life Ins. Co., 77 F.3d 84, 88-89 (4th Cir.
1996). Although the case is a close one, Continental properly denied
Lown’s claim because she did not prove that she was totally disabled
under the terms of the long term disability plan.
The plan defines total disability as "1) continuously unable to per-
form the substantial and material duties of his regular occupation; and
2) under the regular care of a licensed physician other than himself."
The plan also vests Continental with the right to inspect the employ-
er’s records and the right to require the potential beneficiary to be
evaluated by an independent physician.
Lown submitted records from three people — Dr. Ditzler, Dr.
Vasey, and Keith Didyoung, the physician’s assistant — as primary
support for her disability claim. In his affidavit, Dr. Ditzler observed
that Lown has been totally disabled since August, 1997. Dr. Vasey’s
affidavit placed the onset of her disability as February 4, 1998.
Didyoung maintained that as of December, 1997, Lown was only par-
tially disabled. Indeed, the report indicates that Didyoung encouraged
Lown to attempt to work again.
As the district court noted, the affidavits by Drs. Ditzler and Vasey
are inconsistent with other medical records. While Dr. Ditzler’s
August, 1998 affidavit stated that Lown’s total disability began in
August of 1997, the record contradicts this point. Specifically, Lown
herself kept working for over one month after this date. Furthermore,
Didyoung, who examined Lown in December 1997, noted at the time
that Lown was not totally disabled. Moreover, Dr. Vasey’s conclusion
as to the beginning of total disability differed by over six months with
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that of Dr. Ditzler. Dr. Vasey’s February 4, 1998 date as to the onset
of total disability does not help Lown either. Under the policy, Lown
must prove that she was totally disabled before December 16, 1997.
Moreover, no objective medical test confirmed Lown’s disability.
Neither Dr. Ditzler nor Dr. Vasey provided any medical test showing
that Lown was disabled. Continental asked Dr. Vasey for any record
he had, but received what the district court characterized as only "the
most flippant of responses when it sought additional support for his
conclusion." Dr. Vasey told Continental that no "proof" of disability
existed beyond his experience in treating patients. The district court
was thus left to conclude that, "No medical record suggests a finding
of total disability at any time." Our de novo review of the evidence
confirms that Continental properly denied Lown’s claim for benefits.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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